The Los Gatos Town Council rejected a proposal Tuesday night that would have levied a school funding fee on new residential construction. The Los Gatos Union School District proposed the fee to relieve overcrowding.

The fee in question is from 1977. It contains provisions that say any money that’s collected is to be used for interim school facilities.

Town attorney Rob Schultz said the 1977 legislation that permitted the fee has been superseded by 1998 legislation known as SB50. He warned that if the council approved the 1977 fee it would likely result in a lawsuit that the town would lose.

“The school district’s findings for an interim facilities fee do not comply with the legal requirements set forth in the code,” Schultz said.

For one thing, the 1977 legislation says school overcrowding must be caused by new residential construction.

LGUSD said in its findings that the overcrowding was most likely caused by people with school-age children moving into the district.

The town council did agree LGUSD schools are overcrowded and unanimously approved a resolution that encourages developers to work with the school district to mitigate overcrowding.